Disappearing Worker Status: A Seriously Bad Gig

In recent years there has been a huge increase in the number of self employed people. With the rise of Uber, Deliveroo and app-fuelled services, it is estimated that 1 in 7 people are now classed as self employed in what has been coined the ‘gig economy’.

The hidden cost of this change in working status is a huge increase in the number of people who are not recognised by their employers as having the legal status of 'workers'. Individuals working for City Sprint, Addison Lee and two other courier companies are seeking to change that. They have launched a Tribunal claim challenging their ‘self employed’ status to seek confirmation that they are either ‘workers’ or ‘employees’.

The distinction between ‘self employed’ individuals, ‘workers’ and ‘employees’ is a very important one. Whilst workers have fewer rights than employees, qualifying as a 'worker' gives an individual fundamental employment rights such as paid annual leave, the minimum wage and the right not to be discriminated against. Individuals who are genuinely self employed have much less protection.

The theory behind this difference in status is equality of bargaining power: the idea someone who is ‘self employed’ is in business on their own account, and is therefore much freer to dictate their own terms and walk away when they are not happy. However, the reality is that far from having equality of bargaining power, the individuals working for Addison Lee, City Sprint or other courier firms are likely to be amongst the lowest paid and the most vulnerable in the workforce, who are least able to dictate their terms. Entrepreneurs who are genuinely self employed experience the upside in their efforts. In the case of couriers, those who profit most are the companies for whom they provide services (who pay them per delivery and thus may fail to pay them the minimum wage in the process).

The increase in the number of workers has coincided with an increased confusion legally over what a worker actually is: the tests that Tribunals and HMRC use are not the same, the legal tests for worker and employee status are moving closer together and, to top it off, what the contract suggests the arrangement is could very well be incorrect.

It will be very interesting to see how this case progresses in November. If the tribunal declares that the couriers bringing the claim are in fact workers or employees, they will be entitled to living wage and holiday pay, giving them much greater security. Given what is at stake and the number of people who could be affected, that hearing is unlikely to be the end of the matter.

Rolleen McDonnell is a solicitor at leading senior executive employment law firm BDBF